Japanese Asset Price Bubble Collapse (1991)

Japan's asset price bubble collapse (1991) is distinguished by its extraordinary duration—three 'lost decades' of deflation and stagnant growth—and the sheer absurdity of its peak valuations, when the Imperial Palace grounds were worth more than all California real estate. From its 1989 high, the Nikkei 225 fell over 60% by 1992, and real estate prices in Tokyo crashed by 70%, a deeper real estate decline than the 30% U.S. housing drop in 2008. Unlike the quick bailout-driven recovery of #1, Japan's response was slow, with the Bank of Japan cutting rates to zero and GDP per capita still below its 1995 level as late as 2012, making it the longest-lived financial hangover in modern history.